A new mathematical approach in integration of activity-based costing information in supply chain order management

Abstract

Available-to-promise (ATP) is a very important and critical supply chain management concept. Its purpose is to treat the actual and potential demands in a way for a company to obtain the largest possible profit. Optimization is a tool that can help in this subject and provides a reliable decision based on the availability of the production resources and the profitability of the products orders. Activity-based costing (ABC) increases the accuracy of the estimation of the profit that each product or order yields through the proper assignment of the overhead costs. This study presents a pull-based ATP optimization model to manage the actual orders effectively through the integration of ABC and mixed integer programming (MIP).